Government shutdown dampens small business optimism in October

A sign outside the Mt. Rainier Railroad Dining Co. in Elbe, Wash., last month chastised Washington for the closure of Mt. Rainier National Park due to the partial government shutdown.

A sign outside the Mt. Rainier Railroad Dining Co. in Elbe, Wash., last month chastised Washington for the closure of Mt. Rainier National Park due to the partial government shutdown. (Dean J. Koepfler / Associated Press)

Small business optimism plunged in October as companies reined in their hiring plans and lowered their expectations for the future during the partial government shutdown.

The National Federation of Independent Business said its optimism index fell to 91.6 last month, a drop of 2.3 from the month before. Nearly 40% of business owners blamed Washington as the culprit.

"Washington paralysis is never good news for the economy," Bill Dunkelberg, the group's chief economist, said in a Tuesday statement. "It was no surprise that while politicians were arguing over whether or not the government should remain fully operational, small-business optimism measure deteriorated."

The index showed that approximately two-thirds of business owners believed that the current climate would be bad, especially as the new budget deadline in January approaches.

"We don't expect skies to turn blue anytime soon," Dunkelberg said.

Moody's Analytics estimated the economy lost $23 billion in total output during the shutdown. But the new report indicates that businesses and the economy could be feeling ripple effects for much longer.